Notice2025-17728
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Arca Equities Fees and Charges
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 15, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 176 (Monday, September 15, 2025)</title>
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[Federal Register Volume 90, Number 176 (Monday, September 15, 2025)]
[Notices]
[Pages 44442-44448]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-17728]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103938; File No. SR-NYSEARCA-2025-69]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE
Arca Equities Fees and Charges
September 10, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on August 29, 2025, NYSE Arca, Inc. (``NYSE Arca'' or the ``Exchange'')
filed with the Securities and Exchange Commission (the ``Commission'')
the proposed rule change as described in Items I, II, and III below,
which Items have been prepared by the self-regulatory organization. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the NYSE Arca Equities Fees and
Charges (``Fee Schedule'') to modify Ratio Threshold Fees. The proposed
rule change is available on the Exchange's website at <a href="http://www.nyse.com">www.nyse.com</a>, and
at the principal office of the Exchange.
II. Self-Regulatory Organization's Statement on the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of and basis for the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Fee Schedule to modify Ratio
Threshold Fees, which apply to orders ranked Priority 2--Display Orders
and to shares of Auction-Only Orders that have a disproportionate ratio
of orders that are not executed.\3\ More specifically, the Exchange
proposes to eliminate the Ratio Threshold Fee that applies to orders
ranked Priority 2--Display Orders and to modify the manner in which the
Ratio Threshold Fee that applies to Auction-Only Orders is calculated.
The Exchange also proposes to adopt an exemption from the RT--Auction
Fee for the first month that an ETP Holder is subject to the fee during
a 12-month period.
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\3\ See Securities Exchange Act Release No. 88930 (May 21,
2020), 85 FR 32068 (May 28, 2020) (SR-NYSEARCA-2020-45) (``Ratio
Threshold Fee Filing''). See also Securities Exchange Act Release
No. 97681 (June 9, 2023), 88 FR 39275 (June 15, 2023) (SR-NYSEARCA-
2023-39).
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The Exchange proposes to implement the fee changes effective August
29, 2025.\4\
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\4\ The Exchange originally filed to amend the Fee Schedule on
August 1, 2025 (SR-NYSEARCA-2025-56). SR-NYSEARCA-2025-56 was
withdrawn on August 12, 2025, and replaced by SR-NYSEARCA-2025-58.
SR-NYSEARCA-2025-58 was withdrawn on August 21, 2025, and replaced
by SR-NYSEARCA-2025-62. SR-NYSEARCA-2025-62 was withdrawn on August
29, 2025, and replaced by this filing.
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Background
The Exchange operates in a highly competitive market. The
Commission has repeatedly expressed its preference for competition over
regulatory intervention in determining prices, products, and services
in the securities markets. In Regulation NMS, the Commission
highlighted the importance of market forces in determining prices and
SRO revenues and, also, recognized that current regulation of the
market system ``has been remarkably successful in promoting market
competition in its broader forms that are most important to investors
and listed companies.'' \5\
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\5\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7-10-04) (Final
Rule) (``Regulation NMS'').
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While Regulation NMS has enhanced competition, it has also fostered
a ``fragmented'' market structure where trading in a single stock can
occur across multiple trading centers. When multiple trading centers
compete for order flow in the same stock, the Commission has recognized
that ``such competition can lead to the fragmentation of order flow in
that stock.'' \6\ Indeed, equity trading is currently dispersed across
16 exchanges,\7\ numerous alternative trading systems,\8\ and broker-
dealer internalizers and wholesalers, all competing for order flow.
Based on publicly available information, no single exchange currently
has more than 17% market share.\9\ Therefore, no exchange possesses
significant pricing power in the execution of equity order flow. More
specifically, the Exchange currently has less than 10% market share of
executed volume of equities trading.\10\
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\6\ See Securities Exchange Act Release No. 61358, 75 FR 3594,
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on
Equity Market Structure).
\7\ See Cboe U.S Equities Market Volume Summary, available at
<a href="https://markets.cboe.com/us/equities/market_share">https://markets.cboe.com/us/equities/market_share</a>.
\8\ See FINRA ATS Transparency Data, available at <a href="https://otctransparency.finra.org/otctransparency/AtsIssueData">https://otctransparency.finra.org/otctransparency/AtsIssueData</a>. A list of
alternative trading systems registered with the Commission is
available at <a href="https://www.sec.gov/foia/docs/atslist.htm">https://www.sec.gov/foia/docs/atslist.htm</a>.
\9\ See Cboe Global Markets U.S. Equities Market Volume Summary,
available at <a href="http://markets.cboe.com/us/equities/market_share/">http://markets.cboe.com/us/equities/market_share/</a>.
\10\ See id.
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The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
move order flow, or discontinue or reduce use of certain categories of
products, based on transaction fees and credits. Accordingly, the
Exchange's fees, including the proposed modification to the Ratio
Threshold Fee, are reasonably constrained by competitive alternatives
and market participants can readily trade on competing venues if they
deem pricing
[[Page 44443]]
levels at those other venues to be more favorable.
Proposed Rule Change
The Ratio Threshold Fee currently applies to orders ranked Priority
2--Display Orders (``RT--Display Fee'') and to shares of Auction-Only
Orders during the period when Auction Imbalance information is being
disseminated for a Core Open Auction or Closing Auction (``RT--Auction
Fee''). The purpose of this proposed rule change is to eliminate the
RT--Display Fee in its entirety and remove reference to the RT--Display
Fee from the Fee Schedule. The Exchange has observed that ETP Holders
have altered their order entry practices since the RT--Display Fee was
initially adopted and very few ETP Holders have been subject to the
RT--Display Fee since the inception of the fee. The Exchange believes
it is appropriate to eliminate this fee and remove it from the Fee
Schedule. The Exchange would rather redirect future resources into
other programs, including as proposed herein, by modifying the RT--
Auction Fee.
With this proposed rule change, the Exchange also proposes to
modify the manner in which the RT--Auction Fee is calculated. The
purpose of the modification to the RT--Auction Fee is to disincentivize
the cancellation of shares close to the commencement of the Opening
Auction and the Closing Auction. As described below, pursuant to a
formula, shares cancelled closer to the Opening Auction and the Closing
Auction would be weighted more than shares that are cancelled further
away from such auctions. As proposed, the RT--Auction Fee would be
calculated based on the number of shares cancelled by an ETP Holder and
would no longer be based on the ratio of shares that are cancelled
relative to shares that are executed by an ETP Holder. The proposed
modifications are discussed below.
Currently, for Auction-Only Orders,\11\ ETP Holders with an average
daily number of orders of 10,000 or more are charged an RT--Auction Fee
on a monthly basis.\12\ With this proposed rule change, the Exchange
proposes that, in calculating the RT--Auction Fee, the Exchange would
replace the average daily number of orders with the average daily
number of cancelled shares. As proposed, ETP Holders with an average
daily number of 500,000 or more cancelled shares for each auction would
be charged an RT--Auction Fee, if the ETP Holder's Weighted Ratio
Shares Threshold (described below) is greater than or equal to 25.
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\11\ An Auction-Only Order is a Limit or Market Order that is to
be traded only within an auction pursuant to Rule 7.35-E or routed
pursuant to Rule 7.34-E. See Rule 7.31-E(c). Auction-Only Orders are
orders submitted by an ETP Holder during the Early Open Auction,
Core Open Auction, Closing Auction and Trading Halt Auction. See
Rule 7.35-E.
\12\ The current fee focuses on Auction-Only Orders because a
disproportionate amount of such orders that are not executed use
more system resources, including updates to the Auction Imbalance
Information as such orders are entered and cancelled, than other
order entry and cancellation practices of ETP Holders. Accordingly,
as proposed, for Auction-Only Orders, Ratio Shares would include
shares of Auction-Only Orders cancelled during the period when
Auction Imbalance Information is being disseminated for the Core
Open Auction and Closing Auction. The proposed modification to the
calculation method would maintain the same focus and is intended to
disincentivize the activity noted above.
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In revising the manner by which the RT--Auction Fee would be
calculated, the Exchange proposes to modify the definition of ``Ratio
Shares.'' Currently, ``Ratio Shares'' is defined as the average daily
number of shares of Auction-Only Orders that are cancelled by the ETP
Holder at a disproportionate ratio to the average daily number of
shares executed by that ETP Holder. As proposed, the number of ``Ratio
Shares'' would be the total number of shares of marketable Auction-Only
Orders that are cancelled by the ETP Holder. The Exchange proposes to
modify the definition of ``Ratio Shares'' to also include
``marketable'' Auction-Only Orders as these orders directly interact
with the imbalance information that is disseminated in real time to
market participants. Lastly, the Exchange proposes to exclude orders
entered by Market Makers, and not just Lead Market Makers, as is
currently the case, from the calculation of Ratio Shares. The Exchange
believes it is appropriate to exclude all orders from Market Makers,
not just orders from Lead Market Makers, because Market Makers on the
Exchange are already subject to rule-based standards designed to
promote the efficiency and quality of their order entry practices.\13\
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\13\ Pursuant to Rule 7.24-E, among other things, all registered
Market Makers, including Lead Market Makers, have an obligation to
maintain minimum performance standards. Additionally, pursuant to
Rule 7.23-E, all registered Market Makers, including Lead Market
Makers, have an obligation to maintain continuous, two-sided trading
interest in those securities in which the Market Maker is registered
to trade. Although Rule 7.23-E allows Market Makers to quote at wide
spreads, the Exchange's assessment of Market Maker performance has
led it to conclude that Market Makers do not generally engage in
inefficient order entry practices. The Exchange will continually
assess Market Maker performance pursuant to Exchange rules as needed
to promote efficient order entry practices by Market Makers.
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The revised definition of ``Ratio Shares'' would be as follows:
<bullet> The number of ``Ratio Shares'' is the total number of
shares of marketable Auction-Only Orders that are cancelled by the ETP
Holder. Marketable Auction-Only Orders are all market orders and limit
orders priced better than the reference price disseminated in the
imbalance feed at the time of order entry. Orders ranked Priority 2--
Display Orders designated for the Core Trading Session only that are
entered during the period when Auction Imbalance Information for the
Core Open Auction is being disseminated are included in the Ratio
Shares calculation.\14\ All orders entered by an ETP Holder for
securities in which it is registered as a Market Maker are not included
in the calculation of Ratio Shares.
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\14\ For purposes of the Ratio Threshold Fee, orders ranked
Priority 2--Display Orders designated for the Core Trading Session
only that are cancelled during the period when Auction Imbalance
Information for the Core Open Auction is being disseminated are
included in the calculation of the RT--Auction Fee. The Exchange
includes such orders as Auction-Only Orders for purposes of such fee
because prior to the Core Open Auction, such orders would not be
eligible to trade, yet such orders would be included in the
imbalance calculation for the Core Open Auction. This aspect of the
RT--Auction Fee remains the same as it was when the Ratio Threshold
Fee was initially adopted.
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Further, as proposed, Ratio Shares would be weighted based on the
time of day they are cancelled, with later cancellations receiving a
larger weight (``Weighted Ratio Shares''). The weight ranges would be
applied as follows, with the weight fluctuating linearly (in seconds)
within the range:
<bullet> For the Opening Auction:
[cir] Ratio Shares that are cancelled more than 30 minutes prior to
the Opening Auction, the weight range would be 1-2;
[cir] Ratio Shares that are cancelled five to 30 minutes prior to
the Opening Auction, the weight range would be 2-3;
[cir] Ratio Shares that are cancelled one to five minutes prior to
the Opening Auction, the weight range would be 3-5; and
[cir] Ratio Shares that are cancelled less than one minute prior to
the Opening Auction, the weight range would be 5-10.
<bullet> For the Closing Auction:
[cir] Ratio Shares that are cancelled more than 30 minutes prior to
the Closing Auction, the weight range would be 1-2;
[cir] Ratio Shares that are cancelled 10 to 30 minutes prior to the
Closing Auction, the weight range would be 2-3;
[cir] Ratio Shares that are cancelled five to 10 minutes prior to
the Closing
[[Page 44444]]
Auction, the weight range would be 3-5; and
[cir] Ratio Shares that are cancelled less than five minutes prior
to the Closing Auction, the weight range would be 5-10.
The Exchange also proposes to modify the definition of Ratio Shares
Threshold to add the term ``Weighted'' to the current definition so
that the definition would reflect the proposed time-based weighting of
Ratio Shares that are cancelled. The Exchange also proposes to replace
``average daily'' executed shares with ``total'' executed shares and
specify that a threshold is determined for each auction separately. The
revised definition would be as follows:
<bullet> The ``Weighted Ratio Shares Threshold'' is an ETP Holder's
total Weighted Ratio Shares for the billing month divided by the total
executed shares by the ETP Holder in each auction.
The Exchange also proposes to adopt a new defined term, Ratio Share
Differential, that would be used to determine the fee that an ETP
Holder would pay under the proposed modified calculation method. As
proposed, the term ``Ratio Share Differential'' would be as follows:
<bullet> The ``Ratio Share Differential'' is an ETP Holder's total
Ratio Shares minus the total executed shares for the billing month by
the ETP Holder in each auction.
As is the case currently, the Exchange would continue to charge the
RT--Auction Fee for Auction-Only Orders during the period when Auction
Imbalance Information is being disseminated.\15\
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\15\ See Rules 7.35-E(c)(1) (Core Open Auction Imbalance
Information begins at 8:00 a.m. ET) and 7.35-E(d)(1) (Closing
Auction Imbalance Information begins at 3:00 p.m. ET).
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The Exchange currently does not charge the RT--Auction Fee if
Auction-Only Orders have a Ratio Shares Threshold of less than 25.
Currently, if the Ratio Shares Threshold is greater than or equal to
25, the fee is as follows:
<bullet> No Charge for ETP Holders with an average of fewer than 10
million Ratio Shares per day.
<bullet> $5.00 per million Ratio Shares for ETP Holders with an
average of 10 million to 100 million Ratio Shares per day.
<bullet> $15.00 per million Ratio Shares for ETP Holders with an
average of more than 100 million Ratio Shares per day.
The Exchange proposes to eliminate the current tiered fees
applicable to ETP Holders that have a Ratio Shares Threshold that is
greater than or equal to 25.
With this proposed rule change, ETP Holders would be charged a fee
equal to their Weighted Ratio Shares Threshold (in dollars) per 100,000
Ratio Shares Differential. Lastly, the Exchange proposes to modify the
cap applicable to the Ratio Threshold Fee. As proposed, the RT--Auction
Fee for an ETP Holder would be capped at $500,000 per month for each
auction, for a total RT--Auction Fee cap of $1,000,000 per month.
The following example illustrates the calculation of the RT--
Auction Fee for Auction-Only Orders in the Closing Auction, as modified
by this proposed rule change.
<bullet> In the month of June (which has 21 trading days), ETP
Holder A:
[cir] Executed a total of 7,000,000 shares in the Closing Auction;
[cir] Cancelled a total of 50,000,000 shares on various days at
15:00:01;
[cir] Cancelled a total of 30,000,000 shares on various days at
15:35:10;
[cir] Cancelled a total of 15,000,000 shares on various days at
15:53:30;
[cir] Cancelled a total of 5,000,000 shares on various days at
15:58:59.
Given the above activity, ETP Holder A had:
<bullet> Ratio Shares equal to 100,000,000 \16\ shares
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\16\ This calculation is based on the total number of cancelled
shares during the month (50,000,000 + 30,000,000 + 15,000,000 +
5,000,000).
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<bullet> Average Daily Cancelled Shares equal to 4,761,905 \17\
shares
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\17\ This calculation is based on the total number of cancelled
shares during the month (100,000,000) divided by the number of
trading days in the month (21).
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<bullet> Weighted Ratio Shares equal to 233,673,611 shares,
calculated as follows:
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Seconds
Cancel Minimum Maximum from start Seconds in Seconds as Weighted
Ratio shares time Cancel time period period period of time time % of time Weight ratio shares
weight weight period period period
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50,000,000...................... 15:00:01 15:00:00-15:30:00. 1 2 1 1,800 0.056 1.00056 50,027,778
30,000,000...................... 15:35:10 15:30:00-15:50:00. 2 3 310 1,200 25.833 2.25833 67,750,000
15,000,000...................... 15:53:30 15:50:00-15:55:00. 3 5 210 300 70.000 4.40000 66,000,000
5,000,000....................... 15:58:59 * 15:55:00- 5 10 239 240 99.583 9.97917 49,895,833
15:59:00.
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100,000,000..................... .......... .................. .......... .......... .......... .......... .......... .......... 233,673,611
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* Pursuant to Rule 7.35-E.(d)(2), the Closing Auction Imbalance Freeze begins one minute before the scheduled time for the Closing Auction.
** This calculation is based on the Ratio Shares amount multiplied by the Weight for each cancelled activity, as follows:
<bullet> 50,000,000 * 1.00056 = 50,027,778.
<bullet> 30,000,000 * 2.25833 = 67,750,000.
<bullet> 15,000,000 * 4.40000 = 66,000,000.
<bullet> 5,000,000 * 9.97917 = 49,895,833.
Weight = (Minimum Period Weight) + (Seconds from start of Time Period/Seconds in Time Period) * (Max weight-Min weight).
e.g., 4.4000 = 3 + (210/300) * (5-3).
[[Page 44445]]
<bullet> Weighted Ratio Shares Threshold of 33.38194442857143 \18\
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\18\ This calculation is the product of the Weighted Ratio
Shares (233,673,611) divided by the total number of shares executed
during the month (7,000,000).
\19\ This calculation is the product of the total number of
cancelled shares during the month (100,000,000) minus the total
number of shares executed during the month (7,000,000).
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<bullet> Ratio Share Differential of 93,000,000 \19\
Based on ETP Holder A's activity during the month, ETP Holder A
would be charged a RT--Auction Fee equal to $31,045 for June,
calculated as follows: Weighted Ratio Shares Threshold * (Ratio Share
Differential/100,000), or 33.38194442857143 * (93,000,000/100,000) =
$31,045 (rounded down to the nearest dollar).
Finally, the Exchange proposes to adopt an exemption from the RT--
Auction Fee for the first month that an ETP Holder is subject to the
fee during a 12-month period (the ``Exemption''), similar to the
exemption currently offered by the Exchange's affiliates, NYSE Arca
Options \20\ and NYSE American Options.\21\ The Exchange believes that
the Exemption could help protect ETP Holders from incurring the RT--
Auction Fee when they first encounter greater than expected
cancellation of shares in a 12-month period, such as when they are new
to the trading platform, deploying new technologies, or testing
different trading strategies, thereby encouraging ETP Holders to
maintain their trading activity on the Exchange by mitigating the
initial impact of the revised RT--Auction Fee.
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\20\ See NYSE Arca Options Fee Schedule, Monthly Excessive
Bandwidth Utilization Fee, available at <a href="https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf</a> (``The Fee will not be assessed
for the first occurrence in a rolling 12-month period.'').
\21\ See NYSE American Options Fee Schedule, Section II. Monthly
Excessive Bandwidth Utilization Fees, available at <a href="https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf</a>. (``The Fee will not be
assessed for the first occurrence in a rolling 12-month period.'').
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With this proposed rule change, the Exchange proposes to
recalibrate the application of the RT--Auction Fee. The Exchange
believes the proposed modification to the calculation of the RT--
Auction Fee will continue to strengthen the Exchange's goal of
providing a more efficient marketplace and enhance the trading
experience of all ETP Holders by encouraging them to more efficiently
participate on the Exchange.
As noted in the Ratio Threshold Fee Filing, the purpose of the
Ratio Threshold Fee is not to create revenue, but rather to provide an
incentive for a small number of ETP Holders to change their order entry
practices. Based on an analysis of order entry practices by ETP Holders
between May 2025 and July 2025, only 3 ETP Holders would have incurred
the RT--Auction Fee, as modified by this proposed rule change. The
Exchange does not anticipate the proposed recalibration would subject
any additional ETP Holders to the RT--Auction Fee.
The Ratio Threshold Fee is intended to encourage efficient usage of
Exchange systems by ETP Holders. The Exchange believes that it is in
the best interests of all ETP Holders and investors who access the
Exchange to encourage efficient systems usage. Unproductive share entry
and cancellation practices, such as when ETP Holders flood the market
with orders that are frequently and/or rapidly cancelled, do little to
support meaningful price discovery, may create investor confusion about
the extent of trading interest in a security. The Exchange further
believes that inefficient order entry practices of a small number of
ETP Holders may place excessive burdens on Exchange systems and to the
systems of other ETP Holders that are ingesting market data, while also
negatively impacting the usefulness of market data feeds that transmit
each order and subsequent cancellation.\22\ ETP Holders with an
excessive amount of cancelled shares relative to executed shares do
little to support meaningful price discovery.
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\22\ See generally Recommendations Regarding Regulatory Reponses
to the Market Events of May 6, 2010, Joint CFTC-SEC Advisory
Committee on Emerging Regulatory Issues, at 11 (February 18, 2011)
(``The SEC and CFTC should also consider addressing the
disproportionate impact that [high frequency trading] has on
Exchange message traffic and market surveillance costs. . . . The
Committee recognizes that there are valid reasons for algorithmic
strategies to drive high cancellation rates, but we believe that
this is an area that deserves further study. At a minimum, we
believe that the participants of those strategies should properly
absorb the externalized costs of their activity.'').
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As noted above, only a small number of ETP Holders are executing
orders at a disproportionately low ratio to the number of orders that
have been entered and, thus, the impact of the current fee has been
narrow and limited to those ETP Holders. These ETP Holders could avoid
the fee by changing their behavior.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\23\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\24\ in particular,
because it provides for the equitable allocation of reasonable dues,
fees, and other charges among its members, issuers and other persons
using its facilities and does not unfairly discriminate between
customers, issuers, brokers or dealers.
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\23\ 15 U.S.C. 78f(b).
\24\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that the proposed fee change would help to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest, because it is designed to
reduce the numbers of orders and shares being entered and then
cancelled prior to an execution.
The Proposed Changes Are Reasonable
As discussed above, the Exchange operates in a highly fragmented
and competitive market. The Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. Specifically,
in Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognized
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \25\
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\25\ See Regulation NMS, supra note 6, 70 FR at 37499.
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As the Commission itself recognized, the market for trading
services in NMS stocks has become ``more fragmented and competitive.''
\26\ Indeed, equity trading is currently dispersed across 13
exchanges,\27\ numerous alternative trading systems,\28\ and broker-
dealer internalizers and wholesalers, all competing for order flow.
Based on
[[Page 44446]]
publicly-available information, no single exchange currently has more
than 17% market share (whether including or excluding auction
volume).\29\ The Exchange believes that the ever-shifting market share
among the exchanges from month to month demonstrates that market
participants can shift order flow, or discontinue or reduce use of
certain categories of products, in response to fee changes.
Accordingly, the Exchange's fees, including the proposed modification
to the RT--Auction Fee is reasonably constrained by competitive
alternatives and market participants can readily trade on competing
venues if they deem pricing levels at those other venues to be more
favorable.
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\26\ See Securities Exchange Act Release No. 51808, 84 FR 5202,
5253 (February 20, 2019) (File No. S7-05-18) (Final Rule).
\27\ See Cboe U.S. Equities Market Volume Summary, available at
<a href="https://markets.cboe.com/us/equities/market_share">https://markets.cboe.com/us/equities/market_share</a>. See generally
<a href="https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html">https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html</a>.
\28\ See FINRA ATS Transparency Data, available at <a href="https://otctransparency.finra.org/otctransparency/AtsIssueData">https://otctransparency.finra.org/otctransparency/AtsIssueData</a>. A list of
alternative trading systems registered with the Commission is
available at <a href="https://www.sec.gov/foia/docs/atslist.htm">https://www.sec.gov/foia/docs/atslist.htm</a>.
\29\ See Cboe Global Markets U.S. Equities Market Volume
Summary, available at <a href="http://markets.cboe.com/us/equities/market_share/">http://markets.cboe.com/us/equities/market_share/</a>.
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The Exchange believes that the proposed change to the RT--Auction
Fee is reasonable because it is designed to achieve improvements in the
quality of liquidity, particularly in advance of auctions, on the
Exchange for the benefit of all market participants. In addition, the
proposed change is reasonable because market participants may readily
avoid the fee by adjusting their order entry and/or cancellation
practices, which would result in more shares being executed rather than
being cancelled.
Although only a small number of ETP Holders have been impacted
since the Ratio Threshold Fee was implemented, the Exchange believes
the proposed change to the manner in which the RT--Auction Fee is
calculated is necessary to incent the small number of ETP Holders whose
trading behavior imposes on others through order entry practices
resulting in a disproportionate ratio of executed orders or shares to
those that are not executed. Accordingly, the Exchange believes that it
is fair to modify the manner in which the RT--Auction Fee is calculated
and impose the fee on these market participants in order to incentivize
them to modify their practices and thereby benefit the market.
As noted above, the purpose of the proposed fee is not to generate
revenue for the Exchange, but rather to provide an incentive for a
small number of ETP Holders to change their order entry and/or
cancellation behavior. As a general principal, the Exchange believes
that greater participation on the Exchange by ETP Holders improves
market quality for all market participants. Thus, in modifying the
current fee, the Exchange balanced the desire to improve market quality
against the need to discourage inefficient order entry and/or
cancellation practices.
The Exchange notes that the notion of a fee that incentivizes
efficient order entry and/or cancellation practices is not novel. The
Exchange's options market, NYSE Arca Options, charges a fee to OTP
Holders to disincentivize a disproportionate amount of messages sent to
Arca Options that do not result in executions.\30\ In addition, the New
York Stock Exchange charges a Ratio Threshold Fee to incentivize
efficient order entry practices by that exchange's members.\31\
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\30\ See Monthly Excessive Bandwidth Utilization Fee, at <a href="https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf</a>.
\31\ See Ratio Threshold Fees, at <a href="https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf">https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf</a>.
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The Exchange believes that the proposed Exemption is reasonable
because no ETP Holder would be assessed the RT--Auction Fee for the
first month that it is subject to the fee during a 12-month period and
is designed to potentially protect firms that are, for example, new to
the trading platform, deploying new technologies, or testing different
trading strategies, from incurring the fee and affording them an
opportunity to assess their order entry and/or cancellation practices.
To the extent the proposed Exemption encourages ETP Holders to maintain
their trading activity on the Exchange, the Exchange believes the
Exemption would sustain the Exchange's overall competitiveness and its
market quality for all market participants.
The Exchange believes that the proposed rule change to eliminate
the RT--Display Fee is reasonable given the change in behavior by ETP
Holders since the fee was initially adopted. The Exchange believes
eliminating the RT--Display Fee and removing it from the Fee Schedule
would also simplify the Fee Schedule and add clarity to the Fee
Schedule.
The Proposal Is An Equitable Allocation of Fees
The Exchange believes that the proposed change to the RT--Auction
Fee is equitably allocated among its market participants. Although only
a small number of ETP Holders may be subject to the RT--Auction Fee
based on their current trading practices, any ETP Holder could decide
to change its order entry practices at any time and thus avoid the fee.
The fee is therefore designed to encourage better order entry practices
by all ETP Holders for the benefit of all market participants.
Moreover, as noted above, the purpose of the fee is not to generate
revenue for the Exchange, but rather to provide an incentive for a
small number of ETP Holders to change their order entry and/or
cancellation behavior.
The Exchange believes that the proposal constitutes an equitable
allocation of fees because all similarly situated ETP Holders would be
subject to the fee. As noted above, the Exchange believes that because
having a disproportionate ratio of unexecuted orders is a problem
associated with a relatively small number of ETP Holders, the impact of
the proposal would be limited to those ETP Holders, and only if they do
not alter their trading practices. The Exchange believes the proposal
would encourage ETP Holders that could be impacted to modify their
practices in order to avoid the fee, thereby improving the market for
all participants.
The Exchange believes the proposal to adopt the Exemption is an
equitable allocation of fees and credits because it would be available
to all ETP Holders such that no ETP Holder would be assessed the RT--
Auction Fee for the first month that it is subject to the fee during a
12-month period. In addition, to the extent that the Exemption
encourages ETP Holders to maintain their trading activity on the
Exchange by mitigating the initial impact of the RT--Auction Fee, the
Exchange believes the proposed change would promote the Exchange's
competitiveness to the benefit of all market participants.
The Exchange believes that eliminating the RT--Display Fee from the
Fee Schedule is equitable because the fee would be eliminated in its
entirety and would no longer be charged to any ETP Holder. The Exchange
also believes that the proposed change would protect investors and the
public interest because the deletion of the RT--Display Fee would make
the Fee Schedule more accessible and transparent and facilitate market
participants' understanding of the fees charged by the Exchange.
The Proposal Is Not Unfairly Discriminatory
The Exchange believes that the proposal is not unfairly
discriminatory.
The Exchange believes that the proposed change to the RT--Auction
Fee is not unfairly discriminatory. In the prevailing competitive
environment, ETP Holders are free to disfavor the Exchange's pricing if
they believe that alternatives offer them better value and are free to
transact on competitor markets to avoid being subject to the Exchange's
fees that are the subject of
[[Page 44447]]
this proposed rule change. The Exchange believes that the proposed fee
change neither targets nor will it have a disparate impact on any
particular category of market participant. The Exchange believes that
the proposal does not permit unfair discrimination because it would be
applied to all similarly situated ETP Holders, who would all be subject
to the fee on an equal basis.
The Exchange believes the proposed Exemption is not unfairly
discriminatory because it would apply to all ETP Holders on an equal
and non-discriminatory basis. As proposed, no ETP Holder would be
assessed the RT--Auction Fee for the first month that it is subject to
the fee during a 12-month period. The Exchange believes that the
proposed change would encourage ETP Holders to continue trading on the
Exchange by lessening the initial impact of the RT--Auction Fee and
providing ETP Holders with an opportunity to evaluate their order entry
and/or cancellation practices. The proposed change would thus support
continued trading opportunities for all market participants, thereby
promoting just and equitable principles of trade, removing impediments
to and perfecting the mechanism of a free and open market and a
national market system and, in general, protecting investors and the
public interest.
The Exchange believes that eliminating the RT--Display Fee from the
Fee Schedule is not unfairly discriminatory because the fee would be
eliminated in its entirety and would no longer be charged to any ETP
Holder. All ETP Holders would continue to be subject to the same fee
structure, and access to the Exchange's market would continue to be
offered on fair and non-discriminatory terms. The Exchange also
believes that the proposed change would protect investors and the
public interest because the deletion of the RT--Display Fee would make
the Fee Schedule more accessible and transparent and facilitate market
participants' understanding of the fees charged by the Exchange.
Finally, the submission of orders to the Exchange is optional for
ETP Holders in that they could choose whether to submit orders to the
Exchange and, if they do, the extent of its activity in this regard.
For the foregoing reasons, the Exchange believes that the proposal is
consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) of the Act,\32\ the Exchange
believes that the proposed rule change would not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Instead, as discussed above, the Exchange believes
that the proposed fee change would encourage ETP Holders to modify
their order entry and/or cancellation practices so that fewer shares
are cancelled without resulting in an execution, thereby promoting
price discovery and transparency and enhancing order execution
opportunities on the Exchange.
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\32\ 15 U.S.C. 78f(b)(8).
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Intramarket Competition. The Exchange believes the proposed change
to the RT--Auction Fee would not place any undue burden on intramarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act because the proposed fee change is designed to
encourage ETP Holders to submit shares into the market that are
actionable. Further, the proposal would apply to all ETP Holders on an
equal basis, and, as such, the proposed change would not impose a
disparate burden on competition among market participants on the
Exchange. To the extent that these purposes are achieved, the Exchange
believes that the proposal would serve as an incentive for ETP Holders
to modify their order entry practices, thus enhancing the quality of
the market and increasing the volume of orders directed to, and shares
executed on, the Exchange. In turn, all the Exchange's market
participants would benefit from the improved market liquidity.
Additionally, the proposed Exemption would apply equally to all ETP
Holders such that no ETP Holder would be assessed the RT--Auction Fee
for the first month that it is subject to the fee during a 12-month
period. To the extent the proposed change is successful in encouraging
ETP Holders to maintain their trading activity on the Exchange, the
Exchange believes the proposed rule change could promote market quality
to the benefit of all market participants. The Exchange also does not
believe the proposed rule change to eliminate the RT--Display Fee will
impose any burden on intramarket competition because the proposed
change would impact all ETP Holders uniformly.
Intermarket Competition. The Exchange operates in a highly
competitive market in which market participants can readily choose to
send their orders to other exchange and off-exchange venues if they
deem fee levels at those other venues to be more favorable. As noted
above, the Exchange's market share of intraday trading (i.e., excluding
auctions) is currently less than 10%. In such an environment, the
Exchange must continually review, and consider adjusting its fees and
rebates to remain competitive with other exchanges and with off-
exchange venues. Because competitors are free to modify their own fees
and credits in response, the Exchange does not believe its proposed fee
change can impose any burden on intermarket competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Pursuant to Section 19(b)(3)(A)(ii) of the Act,\33\ and Rule 19b-
4(f)(2) thereunder \34\ the Exchange has designated this proposal as
establishing or changing a due, fee, or other charge imposed on any
person, whether or not the person is a member of the self-regulatory
organization, which renders the proposed rule change effective upon
filing.
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\33\ 15 U.S.C. 78s(b)(3)(A)(ii).
\34\ 17 CFR 240.19b-4.
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#1664637a733b75797b7b737862655665737538717960"><span class="__cf_email__" data-cfemail="7705021b125a14181a1a121903043704121459101801">[email protected]</span></a>. Please include
file number SR-NYSEArca-2025-69 on the subject line.
[[Page 44448]]
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSEARCA-2025-69. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the filing will be available for inspection and
copying at the principal office of the Exchange. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to file number SR-NYSEARCA-2025-69 and should be submitted
on or before October 6, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\35\
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\35\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-17728 Filed 9-12-25; 8:45 am]
BILLING CODE 8011-01-P
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